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| Operational | ||
| South African energy cluster | ||
| International energy cluster | ||
| Chemical cluster | ||
| Operational review (continued) Pages | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | | |||||||||||
| Other businesses (continued) | |||||||||||
| Sasol Financing | |||||||||||
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| Providing innovative financing solutions | |||||||||||
| Sasol Financing had a productive year, in which we successfully
managed Sasol Limited’s central treasury requirements and
catered to the treasury and specialised funding needs of the
group’s subsidiaries and their joint ventures across the globe. In the year Sasol continued to generate significant cash, which resulted in a drop in our debt to equity levels to 22% from 29% in the prior year. Sasol Financing is assisting the group in an ongoing review of the structure of the balance sheet. An objective of this review is to assess whether our self-imposed gearing range of 30% to 50% is still suitable, and how this compares with our peers. As part of this process we began returning cash to investors through the share buyback programme authorised by shareholders at the group’s annual general meeting last November. By the end of the 2007 financial year, Sasol Investment Company had repurchased 14,9 million Sasol Limited ordinary shares at an average price of R245,94. This equates to 2,4% of the group’s total issued share capital. We have authority from our shareholders to buy back up to 10%. |
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| “As Sasol grows its global presence, Sasol Financing has a key role to play in helping to facilitate this expansion.” | |||||||||||
| Facilitating group expansion | |||||||||||
| As Sasol grows its global presence, Sasol Financing has a key role
to play in helping to facilitate this expansion through securing
competitive funding solutions. We recently exercised an option to extend for the second time – by a year – Sasol Financing International Plc’s €400 million revolving credit facility. This gives Sasol a considerable amount of flexibility in its offshore funding requirements. The extension of the facility means that it has in effect become a five-year revolving credit facility secured at the more favourable terms usually afforded to three-year facilities. This is evidence of Sasol’s strong credit profile among the international banking community. Through our debut five-year Eurobond, which expires in 2010, we continue to bolster the group’s credit profile in the global capital market. Maintaining our reputation as a sound credit risk requires our ongoing attention. As part of this, one of our key responsibilities is to manage the group’s credit ratings, which has a strong influence on our cost of capital. In the year both our long-term foreign currency ratings were confirmed at investment grade: by Standard & Poor’s at BBB+; and by Moody’s Investor Service at Baa1. In the next three years Sasol plans to spend about R50 billion on capital projects at home and abroad. Sasol Financing is tasked with ensuring we can comfortably meet these expenditure requirements. Our strategic objective is to have the most appropriate funding arrangements specific to the application, in place at the right time and as cost effectively as possible, taking cognisance of the risks involved. |
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| Securing competitive funding | |||||||||||
 Sasol Financing acts as an expert business partner to Sasol business
units and joint ventures for project- and company-specific
specialised financing, as well as financial risk mitigation strategies
and arrangements.Project finance is by its very nature a long-term process. We provide advice to business units and their partners from the outset of any project, to ensure the inclusion in their shareholders’ agreements of all the terms necessary to facilitate project financing. Among the many offshore activities whose funding arrangements we continued to work on over the year were Sasol Polymers Germany’s joint venture in the Middle East, Sasol Synfuels International’s Oryx gas-to-liquids plant in Qatar and Sasol Gas’ natural gas expansion project. By providing a guarantee to banks, Sasol Financing facilitated the purchase in the year by the Mozambique state-owned Companhia Moçambicana de Gasoduto of 25% in Republic of Mozambique Pipeline Investments Company (Pty) Limited. This company owns the pipeline which transports natural gas from Mozambique to South Africa. In the year Sasol Financing – together with our advisors Rand Merchant Bank – devoted considerable energy to establishing appropriate funding structures and instruments to finance our planned group-level black economic empowerment (BEE) transaction. As part of our risk management efforts, Sasol Financing recently advised Sasol Synfuels and assisted to implement its strategic oilprice hedge on 16,4 million barrels of oil, or about 30% of its fuel production, for the 2008 financial year. This offers the business a greater degree of cash flow predictability and stability. It follows on the success of a similar hedge for 2007, which resulted in additional receipts of about US$44 million for Sasol Synfuels. |
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 Gavin Moonsamy andEileen Graham, dealers for Sasol Financing, Rosebank, Johannesburg. |
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